Saturday, 8 October 2011

Remember everything

I just read an account from a small business owner of how he had managed to significantly improve productivity.  He was basing this on the fact that the ratio of output to wage costs was a higher ratio than a couple of years ago.

How had he done this?  By judicious investment in new machinery.

So, was his productivity really better ... if you factor in the costs of purchasing and running the machinery?  I don't know ... but neither does he.  (His labour productivity was clearly improved .. but that doesn't mean multi-factor productivity is better).

So, be careful what you include ... and exclude .. when you measure how well you are doing!

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